It is estimated Basel III will reduce the profitability of banks by as much as 4% while state control will restrict any move to cut costs and reprice

A
s the year draws to a close, it starts to seem the state is getting into
banking and out of everything else. To quote Marilyn Monroe as Sugar Kane in
Billy Wilder’s film Some Like it Hot, the tax-payer always seems to “end up
with the fuzzy end of the lollipop”.

Out go energy, transport and natural resources, such as state forests. In come
Allied Irish Banks (AIB), and possibly a majority stake in Bank of Ireland
in the new year.

On page 4 of this section Damien Kiberd describes the complete failure of
government banking policy, a catalogue of missteps triggered by one single
event: the introduction of the state guarantee.

The guarantee itself was not a bad idea. One bank analyst famously, and quite
correctly, described it as “an elegant solution”. But did anybody ever
believe the Irish taxpayer could ever honour such a guarantee or afford such